Executive Summary
- Frames employee retention as a "pyramid": base needs are pay, environment, and workspace; the middle tier is total compensation (health benefits, schedule flexibility, bonuses, childcare assistance, life/disability insurance, retirement matching).
- Recommends regular one-on-one meetings (rather than surveys alone) to learn what individual employees value, since growth doesn't have to mean a formal promotion — even incremental title changes (e.g., Receptionist to Administrative Assistant to Office Manager) can boost retention.
- Identifies money, time, and title as the three most desired forms of compensation employees look for when there's limited room for traditional advancement.
Managing employees is difficult. Even with the best team, you will still encounter problems and challenging situations. One of these is how to retain that great team you have. This is especially difficult in small or even medium-sized businesses where there is no room for growth, meaning there is a lack of significant advancements available to each employee. At least, maybe it seems that way.
PaydayHCM was created almost 40 years ago with the idea of helping clients with difficult questions like this one. In our experience, there are always ways to strengthen retention, even if it seems there is no room for your best employees to grow. It just takes some creativity and a lot of open communication with each employee.
This article will take you through the basics of retention, and what it takes to meet the basic needs of your employees. We’ll then share some additional tips for boosting retention and making sure that you can keep your best people happy and hard-working.
- Meet Your Employees' Basic Needs First
- Pay Attention to Your Total Compensation Package
- Be Creative In Your Approach to Retention
1: Meet Your Employees' Basic Needs First
You can think of your employees’ needs as a pyramid. At the base of the pyramid are the essential elements that draw an employee to your company and help them feel like it’s a place where they can be comfortable. These three essential elements are:
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Pay
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Environment
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Workspace
This is your foundation for attracting talent during the initial phase of employment. Your new hire should feel that their pay is appropriate. They should feel that the environment is somewhere they can be comfortable. They should also have a workspace that is conducive to the work they are doing. With these three you are off to a great start but there is even more that you can do to ensure your employees stay with your company.
2: Pay Attention to Your Total Compensation Package
This is the middle of the pyramid. This will be the bulk of what you focus on to keep your employees. The total compensation package includes all of the ways you compensate your employees, other than their wages or salary. Examples of this are:
- Health benefits - healthcare and can include vision and dental
- Flexibility in schedule - hybrid or work-from-home options, as well as customized work schedule as needed
- Bonuses - anything you are paying on top of the base wage. These can be tied to performance or company culture standards
- Childcare Assistance - this can come in the form of stipends, credits or can tie into flexible scheduling
- Life insurance - payout provided for the employees and spouses in case of death
- Disability insurance - this provides security and peace of mind for your employees knowing that they are taken care of, in the event they become disabled
- Retirement - 401k, pension or other benefits that kick in after retirement. These can also include programs where you match a percentage of your employees' contributions
These are the types of compensation that will keep your employee anchored to the organization. If their basic needs are met, then the next step is using these listed retention tools to keep that employee happy and productive.
3: Be Creative In Your Approach to Retention
Let’s face it, if you’re running a small or even a medium-sized business there just may not be a lot of room for growth. That’s when you have to start thinking creatively about how to retain your employees. It begins with communication.
You need to have a strong sense of what your employees need and want. The best way to do this is to talk to them directly. We recommend implementing this in your recurring one-on-one meetings with each employee. A survey will work also but you will get better individual insight through one-on-one discussions.
In addition, you may not think you have room for growth when you do. Growth doesn’t have to come in monumental steps. You don’t have to promote your employees to any specific title based on a chart or government regulation. It’s up to your discretion. If you only have the resources to make small advancements, your employees will still recognize the efforts and find greater satisfaction at their job.
For example, maybe you have an ambitious receptionist who is always looking to take on new challenges and advance her career. You can offer her new titles as she progresses. She may start as Receptionist 1, advance to Administrative Assistant, and then Office Manager. Remember, titles are important because they represent advancement and they have tangible financial benefits attached to them.
There Is Always A Way to Strengthen Retention
It can seem difficult to provide each employee with meaningful forms of compensation to retain their talent but don’t be discouraged. Instead, focus on providing the basics first: wage, environment, and workspace.
Then be sure that you have open communication with each employee through one-on-ones. Finally, be creative and find things that you can offer that may not come directly out of your pocketbook but are meaningful to your employees.
The three most desired types of compensation are money, time, and title. This is your best place to start when thinking about benefits but you can go beyond these basics as well. Employee retention is a continuous process. You will never be finished with it but it will get easier as you learn more about your employees and practice implementing new types of compensation.
Want to learn more about hiring and retention? Check out our piece on ensuring your new hires have a successful first 30 days.
Frequently Asked Questions (FAQs)
Q: How can I retain employees when there's little room for promotion?
Start by meeting basic needs — fair pay, a comfortable environment, and an adequate workspace. From there, focus on your total compensation package (benefits like health coverage, flexible scheduling, and retirement contributions), and get creative: growth doesn't have to mean a formal title change from an org chart — even small, meaningful title or responsibility changes can boost satisfaction and retention.
Q: What should a total compensation package include besides salary?
Beyond wages, consider health benefits (medical, vision, dental), schedule flexibility (hybrid or customized hours), performance or culture-based bonuses, childcare assistance, life and disability insurance, and retirement contributions or matching. These are the elements that keep employees anchored to your organization long-term.
Q: How important is one-on-one communication for employee retention?
Very. Regular one-on-one meetings give you a much clearer read on what individual employees need and want than a general survey, and open communication is one of the most effective (and lowest-cost) retention tools available, especially in smaller businesses with limited room for structural growth.